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A20
FRIDAY,
JANUARY 1,
2016
• Twitter: @GuardianTT • Web: guardian.co.tt
The dawning of the new
year has found the T&T
economy in a situation of
decline that is frighteningly
reminiscent of the lean years of
the 1980s when consecutive
years of negative growth took a
toll.
As is the case now, declining
oil prices hit the country s ener-
gy-based economy, starting in
1981 but at first no one paid
attention because in the preced-
ing eight years, T&T had
enjoyed a significant windfall
from a rise in global oil prices.
Awash with current account
surpluses and increases in for-
eign exchange reserves, the pop-
ulation luxuriated in the energy
riches of those oil boom years.
The public service expanded
rapidly and the Government
embarked on major capital
expenditure projects, resulting in
significant increases in recurrent
expenditure.
It did not help that high and
unsustainable levels of con-
sumption and expenditure by
the Government and even aver-
age citizens continued long after
falling oil prices should have
triggered alarms. The country s
stock of foreign reserves rapidly
depleted and as energy sector
earnings declined, the rate of
unemployment more than dou-
bled from ten per cent to 22 per
cent between 1982 and 1987.
The resulting balance of pay-
ment difficulties led the then
National Alliance for Recon-
struction (NAR) administration
to sign a stand-by agreement
with the International Monetary
Fund (IMF) and T&T embarked
on a long, painful period of
structural adjustment.
That is why the announce-
ment a few weeks ago by for-
mer Central Bank Governor
Jwala Rambarran that the coun-
try is once again in a recession
triggered so many expressions of
worry. Among the concerns is a
possible return to the IMF and a
period of enduring strict condi-
tionalities from that internation-
al lending agency.
It is now an unavoidable fact
that 2016 brings with it the bit-
ter reality of austerity. However,
all indicators are that Prime
Minister Dr Keith Rowley and
his administration do not want
T&T to go the route of
Caribbean neighbours Jamaica
and Grenada which are already
several months into their latest
IMF programmes.
Only time will tell whether his
proposed remedies will be effec-
tive in reviving an economy that
has been buffeted over the past
18 months by plummeting ener-
gy prices. The volatility in ener-
gy markets, which is at the core
of T&T s economic woes,
showed no signs of easing and
in the last trading hours of 2015
West Texas Intermediate (WTI),
was trading at around US$36.28
a barrel. The immediate outlook
for oil prices is bleak, with
some analysts forecasting prices
plunging as low as US$20 per
barrel.
The measures proposed on
Tuesday, as tough as they are,
are seen as healthier option than
the IMF which, although it has
done away some of its stringent
harmful conditionalities, is last
resort for a developing country
like T&T.
Dr Rowley, whose political
career as an Opposition Senator,
then MP, in the People s
National Movement (PNM)
began during those challenging
years, is fully aware of how
socially and politically debilitat-
ing the IMF option can be for
the country.
With an adjustment of the
budget expected within the first
quarter and a range of cost cut-
ting measures and adjustments
to be implemented, the coming
months will be crucial. Whether
T&T moves into economic
recovery, or a more painful level
of decline, depends on how
willing the population is to
finally heed the difficult lessons
of the 1980s.
Austerity bitter pill better than IMF
It is now an unavoidable fact that 2016 brings with it the bitter reality of
austerity. However, all indicators are that Prime Minister Dr Keith Rowley and his
administration do not want T&T to go the route of Caribbean neighbours Jamaica
and Grenada which are already several months into their latest IMF programmes.
With Japan offering an apology and 1
billion yen (about $8.3 million) to help
establish a foundation to support the
women forced to work as sex slaves
during the Japanese occupation of the
Republic of Korea, the two countries
agreed to settle their long-standing
differences over the so-called comfort
women on Monday.
This marks a turning point in ties
between Tokyo and Seoul. It should also
serve as a starting point for Japan to act
in a more responsible manner to resolve
the sensitive historical issue with its
other neighbours.
From a regional perspective, the
rapprochement between Japan and the
ROK could contribute to regional peace
and stability and encourage countries in
the region to pursue a peaceful road of
development.
Yet Japan needs to be reminded that
ROK women were not the only victims
of its wartime crimes. Historians
estimate there were about 200,000
"comfort women" from China, the Korean
Peninsula, Southeast Asia, Russia, the
Netherlands and other countries. In all,
less than 100 are still alive today.
Obviously, this step, although
welcome, does not settle the "comfort
women" issue as a whole. Given that
Japan's settlement with the ROK is
largely politically driven, rather than
being a true reflection of its
responsibility, the move is not enough to
signify Japan is ready to truly own up to
its past.
At present, ties between China and
Japan, and the ROK and Japan have
thawed somewhat, and trilateral
cooperation has been revived. But for the
sake of lasting peace and stability in
Northeast Asia, Japan is obliged to
properly address the historical issues
that it has allowed to fester for so long.---
Chinadaily.com
Sound Off: Japan has to own up to past